Olive Garden tries getting back to basics

July 11, 2011|By Sandra Pedicini, Orlando Sentinel

So you didn't know what soffatelli and pastachetti were when you saw them on the Olive Garden menu recently? Don't feel badly. Neither, it appears, do Italian chefs — or even Italians in general, for that matter.

The dishes with made-up names were too unfamiliar and fell flat, contributing to two quarters of disappointing sales at the chain.

Now Olive Garden is getting back to basics with food and focusing more on good deals in ad campaigns.

A defensive posture is unusual for Olive Garden, which has traditionally been considered the star of Darden Restaurants' portfolio that also includes Red Lobster, LongHorn Steakhouse and other chains. Darden, Orlando's only Fortune 500 company, rang up $7.5 billion in sales last year.

With $881 million in sales last quarter, Olive Garden is still the biggest of the brands. But sales at established restaurants have stagnated over the past few months.

Darden executives talked about the new Olive Garden strategy in a July 1 discussion with analysts, the day after fourth-quarter numbers were announced. The chain will "more consistently offer dishes that are both broadly appealing and compelling," President and Chief Operating Officer Drew Madsen said.

Through a spokeswoman, Olive Garden executives declined a request to talk to the Orlando Sentinel.

Restaurant experts say chains such as Olive Garden have to innovate as they age to prevent getting stale. But Olive Garden, which turns 30 next year, must walk a delicate line between keeping things fresh and maintaining its loyal customer base.

When the chain introduces dishes with a twist, some customers may be "looking at it like, what is that? I'm not sure I want that," said Darren Tristano, executive vice president of Chicago-based restaurant research firm Technomic. "Some of the styles, the names, the gourmet ingredients may be confusing."

Olive Garden has run into problems with its limited-time offers. Lately, those specials have featured a mix of trendier food and dishes with unfamiliar names.

Earlier this year one of its pasta dishes featured pear and gorgonzola, a combination found at pricier Italian restaurants such as Antonio's La Fiamma inMaitland.

Olive Garden followed that up with dishes called soffatelli and pastachetti. Those names don't turn up in a look through Italian cookbooks or Italian dictionaries and in Google searches they appear in the context of Olive Garden dishes.

Asked if Olive Garden invented the names, spokeswoman Heidi Schauer said in an email that they "are rooted in the Italian inspiration our chefs draw from when developing these dishes."

Otis described pastachetti as a dish that's "not as familiar in the states as some other things we could do" in an interview with CNBC.

"Well, I'd have to go to my marketing people, but it's a pillow — it's a pillowed pasta" similar to ravioli, he said. (The dish was lasagna squares filled with cheese.)

Now Olive Garden is promoting a special for a more common pasta: ravioli.

Darden executives say going beyond Olive Garden's mainstream menu has been an attempt to build its brand over the long term and broaden the chain's appeal.

Purists often turn up their noses at Olive Garden's mass-market version of Italian food. Earlier this year, comedian Conan O'Brien aired a mock training video featuring a narrator with an Irish brogue who pronounces Olive Garden "about as Italian as I am."

Yet, many diners crave the familiarity of Olive Garden's menu, as much as endless breadsticks.

James and Evelyn Bellew are an Apopka couple in their late 60s who dine at the chain about once a week.

She likes the chicken scampi; he gravitates between the Tour of Italy combo and chicken parmigiana.

"I like the consistency," Evelyn Bellew said. "You know it will be the same every time ... Usually, I like the old tried and true."

Olive Garden also plans to focus on value more in its advertising, using a new tactic out of Red Lobster's playbook that Darden says helped its seafood chain increase sales. Saying consumers want to know exactly what they can expect to pay, Olive Garden is now advertising specific prices or ranges instead of just giving the lowest starting price.

Tristano doubts that strategy will help as much as it did at Red Lobster, which he said needs to emphasize low prices more because seafood meals generally cost more.

And other factors besides dragged down sales.

The opening of new Olive Gardens has taken some customers away from existing ones, executives said. Darden also decided not to increase prices during the fourth quarter, as it had a year ago. High gasoline costs kept sales down for many businesses.

Even so, investors don't appear too alarmed. While Darden's stock dipped in after-hours trading after the earnings report came out, the next day it rose 6 percent. On Monday, Darden closed at $52.18 a share.